Global anti-money laundering watchdog the Financial Action Task Force (FATF) said on June 28, 2024, it had added Monaco to a “grey list” of countries subject to increased monitoring. File
| Photo Credit: Reuters

Global anti-money laundering watchdog the Financial Action Task Force (FATF) said on June 28 it had added Monaco to a “grey list” of countries subject to increased monitoring.

The action comes despite Monaco having already taken a series of actions after being singled out by the Council of Europe’s anti-money laundering body following a series of unverified claims against figures close to Prince Albert II.

The FATF, a Paris-based organisation which monitors efforts by more than 200 countries and jurisdictions to prevent money laundering and the financing of terrorism, added Monaco and Venezuela to its grey list at a plenary meeting held in Singapore.

Grey list nations are considered to have “strategic deficiencies” in countering money laundering and terrorist financing, while however cooperating with the FATF to correct the problems.

‘Monaco needs to address strategic deficiencies’

Long known as a playground for the rich and famous, Monaco attracts rich residents due to an extremely favourable tax regime which include an absence of income and wealth taxes. “Despite significant progress achieved since 2022, Monaco needs to address strategic deficiencies,” said FATF president Raja Kumar.

Monaco’s government said it is committed to getting off the grey list. “The principality confirms its determination to implement the latest FATF recommendations set out in the declaration, in accordance with the planned deadlines,” the government of the Mediterranean tax haven said.

Measures already taken by Monaco

The FATF found that Monaco had not made enough efforts to stop laundering money from fraud committed abroad or moved aggressively enough to seize criminal assets. It also judged money-laundering penalties to be insufficient and investigators lacked sufficient resources.

In January 2023, the Council of Europe’s anti-money laundering body Moneyval urged Monaco to intensify its efforts in the investigation and prosecution of money laundering. It has since adopted nine laws to toughen its rules and boost its anti-money laundering body, the AMSF.

Local sources have said it has been difficult to apply the measures immediately due to a lack of qualified staff.

A 2023 census put the number of Monegasques at 9,720, which means that Monaco often needs to rely on foreign experts, which is not in conformity with FATF rules.

Monaco was briefly on a OECD blacklist of financial centres in 2009, which prompted it to undertake a series of transparency measures and put into place cooperation agreements to help crack down on tax evasion.

Monaco has been shaken since the end of 2021 by anonymous denunciations orchestrated by a website “Les Dossiers du Rocher” (“The Rock Files”).

The site accused several figures close to Prince Albert of being in cahoots in a money laundering scheme based on corruption in property deals, and forced the ouster in 2023 of crown assets chief administrator Claude Palmero.

Jamaica, Türkiye removed from grey list

The FATF also removed Jamaica and Türkiye from the grey list after they eliminated the identified deficiencies in their efforts to prevent money laundering and the financing of terrorism.

“Thanks to the good measures we’ve adopted, Türkiye has been removed from the grey list,” the economy ministry said following the decision.

FATF had placed Türkiye on the list in October 2021. A total of 21 nations are on the grey list, including Mali, Vietnam and Yemen.

The FATF also has a “black list” of nations which are considered high-risk jurisdictions. The body urged countries to apply countermeasures against Iran and North Korea and warned about the latter’s “illicit activities related to the proliferation of weapons of mass destruction (WMDs) and its financing”.

It urged countries to end all business with North Korean banks and limit business with Pyongyang entities.

The FATF also urged countries to apply countermeasures to Iran, which it noted had not ratified the Palermo and Terrorist Financing Conventions.

Singapore:

Singapore: The Financial Action Task Force (FATF) on Friday adopted a mutual evaluation report that assesses the effectiveness of India’s anti-money laundering and countering the terrorist financing regime, a move the government termed a “significant milestone”.

In its brief outcome statement at the end of its three-day plenary meeting here, the global body said India’s legal regime in these two domains was “achieving good results” and that the country has reached a “high level of technical compliance” with the FATF requirements.

It, however, said the country needs to address “delays” related to the conclusion of money laundering and terrorist financing prosecutions.

The final evaluation report for the country will be published later when the “quality and consistency review” is completed, it said.

Sources involved in the process said India has been placed in the “regular follow up” category, a distinction shared by only four other G20 countries, which means that it needs to submit a progress report on implementing FATF measures only in October 2027.

Countries placed in the ‘enhanced follow up’ category are required to submit a follow up report every year.

The Paris-headquartered body leads global action to tackle money laundering, terrorist and proliferation financing. The latest decisions were made public at the end of the June 26-28 FATF plenary.

The Indian side was represented by Additional secretary in the Union finance ministry and Financial Intelligence Unit (FIU) in-charge Director Vivek Aggarwal.

In New Delhi, the Union finance ministry issued a statement saying the positive evaluation of India by the FATF was a significant milestone in the country’s efforts to combat money laundering and terror financing.

India’s performance on FATF mutual evaluation demonstrates overall stability, integrity of the financial system, the ministry said.

India’s mutual evaluation on FATF guidelines, a measure that checks a country’s efficacy to frame robust laws and policy and implement them to check financial crimes, was last done in 2010.

An FATF peer review of India ended early this year after a team of international experts made an ‘on-site’ or a physical visit to New Delhi and met officials from various central and state intelligence, investigative agencies, financial regulators and judiciary.

The statement issued at the end of the plenary said it was concluded that India has reached a high level of technical compliance with the FATF requirements and its AML/CFT/CPF regime is achieving good results, including in its money laundering and terrorist financing risk understanding, international cooperation, access to basic and beneficial ownership information, use of financial intelligence, and depriving criminals of their assets and counter-proliferation financing measures.

AML stands for anti-money laundering, CFT for countering financing of terror and CPF means counter proliferation financing.

The statement, however,added that India required “improvements” to strengthen the supervision and implementation of preventive measures in some of the non-financial sectors.

“India also needs to address delays relating to concluding money laundering and terrorist financing prosecutions, and to ensure that CFT measures aimed at preventing the non-profit sector from being abused for terrorist financing are implemented in line with the risk-based approach, including by conducting outreach to non-profit organisations on their terrorist financing risks,” it said.

The government said India’s performance on the FATF mutual evaluation “accrues significant advantages to our growing economy, as it demonstrates the overall stability and integrity of the financial system.” 

“Good ratings will lead to better access to global financial markets and institutions and increase investor confidence. It will also help in the global expansion of the Unified Payments Interface (UPI), India’s fast payment system,” it said.

The finance ministry said this recognition from the FATF was a “testament to the rigorous and effective measures implemented by India over the last 10 years to safeguard its financial system from ML/TF threats.” 

“It underscores the country’s commitment to international standards and its proactive stance in the global fight against financial crimes,” it said adding this also sets a benchmark for “countries in our region” to effectively implement international standards on terrorist financing.

The ministry said by this adoption, FATF has recognised India’s efforts mitigating the risks arising from money laundering and terrorist financing, including the laundering of proceeds from corruption, fraud, and organised crime.

External Affairs Ministry spokesperson Randhir Jaiswal said the FATF has given a good and astounding outcome for India.